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Although revenues increased 10.0% year over year to $572 million it failed to beat the Zacks Consensus Estimate of $574 million. The year-over-year revenues were positively impacted by broad based revenue growth across its business segments.

International revenues (including Europe, Canada and Latin America) grew 6% year over year to $128.5 million, primarily due to 12% growth in the Europe segment, 1% in the Canada Consumer segment, followed by 5.0% growth in the Latin America segment.

Revenues from the Workforce Solutions segment increased 3% year over year to $115 million. The upside resulted from an 8% year-over-year increase in Employer Services revenues while revenues from Verification Services remained flat.

North American Personal Solutions contributed $52.3 million to revenues, reflecting a 14% year-over-year improvement. North American Commercial Solutions generated $23.1 million, up 9% from the year-ago quarter.

Operating Results

Operating margin was 27.6% as against 25.1% a year ago. Margin performance was better in the Workforce solution, USCIS and International, which more than offset the margin declines from North America Personal Solution and North America Commercial Solution segments.

The company reported higher operating expenses with selling, general and administrative expenditure increasing 7.4% year over year.

Equifax reported net income (excluding the impact of acquisition-related amortization expense, net of tax and cash income tax benefit of acquisition-related amortization expense of certain acquired intangibles) of $111.6 million or 90 cents per share compared with $90.8 million or 74 cents reported in the year-ago quarter.

Balance Sheet

Equifax exited the quarter with $131.9 million in cash and cash equivalents, up from $104.9 million in the previous quarter. Total long-term debt remained flat at $1.43 billion sequentially. The company repurchased stocks worth $11.9 million during the quarter.

Guidance

Considering the recent domestic and international business activities, current foreign exchange rates and the expected slowdown in mortgage activities, the company expects consolidated revenues for fiscal 2013 at the mid-point of 10.0%–12.0% year-over-year range. Adjusted earnings per share are expected to grow in the range of 21%–24% from the year-ago quarter.

Our Take

Equifax reported mixed third-quarter results. While Equifax’s bottom line beat the Zacks Consensus Estimate, its top line fell short of the same. Nonetheless, the company’s revenues increased on a year-over-year basis aided by strong growth across its business segments.

Management’s efforts such as strategic initiatives for product innovation, expansion of data assets through acquisitions and continuous share gains in North America were encouraging.

Given the company’s strong correlation to consumer and financial markets as well as its U.S. and European exposure, we see a gradual improvement in results. Moreover, improving mortgage environment is a big positive for the stock. However, stiff competition from Automatic Data Processing Inc. (ADP - Free Report) , Fiserv Inc. (FISV - Free Report) and Moody’s Corp. (MCO - Free Report) , and uncertainty in the mortgage sector are concerns.

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